Pilots at American Airlines approved a new contract Monday worth $9.6 billion over its four-year term, making the carrier the second of the major U.S. carrier after Delta Air Lines to finalize a new pilot accord.

But the deal was hardly a slam dunk for the Allied Pilots Association (APA) that represents the roughly 13,900 pilots at American. Only 72.7% of crew members voted for the deal, according to the union with the balance voting against. Ninety-five percent of pilots voted.

One sticking point among pilots was the failure of the deal to provide them with additional scheduling flexibility.

The contract will raise wages 44% over its term, but it is expected to boost wages by 47% once a snap-up provision is implemented to match rates at Delta and United Airlines. Pilots at American will see an immediate more than 21% pay jump under the deal. It also includes $1.2 billion in retroactive pay and bonuses.

American CEO Robert Isom called the ratification a “great day” for the airline and its pilots in a statement Monday. He added that it would allow the carrier to expand its training capacity, something that was a chokepoint for American to fully recover from the pandemic in 2021 and 2022.

A previous tentative agreement between the APA and American was put on hold after United reached its own tentative deal in July. Following additional talks between the airline and union, the carrier agreed to match the wages offered by United and Delta.

Pilots at Delta ratified a four-year contract of their own in March. That deal included up to 34% pay increases, as well as a snap up provision that meant Delta would match any higher rate set by either American or United. Roughly 78% of pilots at the Atlanta-based carrier voted in favor of the accord.

While the pilot deals were needed to secure labor peace for the airlines, they are also a big contributor to rapidly rising costs. Unit costs, excluding fuel and special items, at American were up 16% from 2019 levels in the second quarter and are forecast to increase another 2-4% in the third quarter. The outlook includes the new labor agreement.

American and other airlines have largely offset the cost increases they’re seeing with higher fares. But fares have begun to fall and the industry has yet to pullback on its post-pandemic capacity growth, which puts further downward pressure on airfares if travel demand does not keep rising.

(IMF Photo/Cory Hancock)

Updated with additional details of the new agreement, statement from American CEO Robert Isom, and background on the negotiations.


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Tags: airlines, american airlines